Consumer Watch: Rainy days are here for rewards

Published 6:30 am, Saturday, November 22, 2008

Most people used to save their rewards points for a dream vacation or to purchase an expensive item such as a flat-screen TV.

Not surprisingly, things have changed a bit in this economic downturn.

Regardless of whether they're from airlines, hotels or credit-card use, rewards points now are getting cashed in for routine trips to visit Grandma or to buy things for daily needs.

That could happen even more during the upcoming holidays.

Don Berg, vice president of loyalty programs for InterContinental Hotels Group, a chain that provides frequent customers free nights or merchandise in exchange for rewards points, said the company has seen this before during tough economic times.

Berg said point redemption for free rooms is growing about four times faster than paid rooms. Typically, he said, they move in the same range together.

"You might be a person who wants to save up for a big vacation in five years or a big, flat-screen TV. Well, guess what? You've got expenses this month or this week and you'd rather use your points for that," Berg said.

"The thing is that people who said, 'I'm going to save for a rainy day,' have looked out the window and have seen the water pouring down and said, 'as long as I'm going to visit person X and would have to stay some place, this is the time to use whatever points I've got,' " Gelb said.

Frequent-flier miles have been popular with airlines for years.

So far this year, Houston-based Continental Airlines' customers have cashed in travel rewards about 17 percent more than during the same period last year, said Mary Clark, the airline's spokeswoman.

More cashing in

Chris Mainz
, a Southwest Airlines spokesman, said there has been a slight increase in the number of frequent-flier rewards used this year.

Berg said the increase is "nothing we wouldn't have expected, considering our growth as an airline," while Clark said her company did not have the data to explain it.

Airline experts who track the industry's rewards programs attribute those increases to the economy.

Matthew Bennett, CEO of firstclassflyer.com, a Web site dedicated to upgrading airline tickets, said he's hearing that from the readers of his blog and Web site.

"People are pinching their pennies," Bennett said. "And while they are pinching their pennies, they are looking around and saying, 'I got a bank account full of miles. The future is uncertain.' "

Another popular way to gain rewards points is through some credit-card purchases.

Earlier this month, American Express conducted a survey showing that 87 percent of its 900-plus travel agents said customers are using rewards points to offset travel costs this holiday season. That's up from 70 percent last year.

"We're seeing our card members find savvy ways to save costs by redeeming their Membership Rewards points," said Tracey Beberman, American Express vice president of Membership Rewards Partnerships and Marketing. "Year over year, overall redemptions are experiencing double-digit growth, and travel is among the most popular rewards for our cardmembers."